Summary
Union Pacific Corporation (UNP) announced an update regarding previously disclosed tax refunds related to railroad retirement taxes on certain stock awards and bonus payments made between 1991 and 2017. The company has received a favorable court judgment in February 2019, which will result in a $42 million reduction in compensation expense and $27 million in associated interest income being recognized in the first quarter of 2019. This update was presented at industry conferences by key company executives.
Key Highlights
- 1Union Pacific received a favorable court judgment regarding a portion of previously disclosed tax refunds.
- 2The company expects to record a $42 million reduction in compensation expense in Q1 2019 due to this judgment.
- 3Associated interest income of $27 million is also expected to be recorded in Q1 2019.
- 4The total expected tax refund and related interest income was previously estimated at $78 million and $30 million, respectively, for fiscal year 2019.
- 5The remaining portion of the tax refunds is still pending with the IRS but is anticipated to be received before the end of 2019.
- 6This information was shared at the J.P. Morgan Aviation, Transportation & Industrials Conference and the Raymond James 40th Annual Institutional Investors Conference on March 6, 2019.
Frequently Asked Questions
The tax refund relates to railroad retirement taxes paid on certain stock awards and bonus payments made between 1991 and 2017. The company had previously disclosed an expectation to receive these refunds.
The favorable court judgment will lead to a $42 million reduction in compensation expense and an additional $27 million in associated interest income, both of which are expected to be recorded in the first quarter of 2019.
No, only a portion of the tax refund has been finalized due to the favorable court judgment. The remaining portion is still pending with the Internal Revenue Service, though the company anticipates receiving it by the end of 2019.
The update on the tax refund and the favorable court judgment was disclosed on March 6, 2019, at the J.P. Morgan Aviation, Transportation & Industrials Conference and the Raymond James 40th Annual Institutional Investors Conference.